Unless you’re paying cash for your home, mortgages are simply a fact of life. You can use this simple mortgage calculator to get an idea of what your monthly payments will be.
What is a mortgage?
A mortgage is a loan given by a lender to a borrower in order to purchase real estate. The borrower is the homeowner. The lender is the bank.
There are two types of mortgages: conventional and subsidized (or insured). Subsidized (insured) mortgages include federally insured VA loans, FHA loans, USDA loans, and other privately insured sources. A conventional mortgage is any loan that isn’t subsidized or insured by the government. Conventional mortgages are offered by banks and other financial institutions.
How long is a mortgage for?
A mortgage is typically for anywhere from 10 to 30 years. This is called the term. The monthly payment is an amount that must be paid each month to keep up with interest charges and principal repayment.
When the borrower has paid off enough of the loan so that there are no outstanding mortgage payments, he or she owns the home.